GTE first-quarter
profit up 29.9%

Internet service and dedicated
private lines boosted
its revenues

By Russ Lynch
Star-Bulletin

GTE Hawaiian Tel had a 29.9 percent increase in its first-quarter profit, with its returns boosted by increased demand for Internet service and higher rates for dedicated private lines.

The company today reported a profit of $15.2 million for the three months ending March 31, up from a profit of $11.7 million in the 1997 quarter. First-quarter revenues of $160.3 million were up 6.9 percent compared with $149.9 million in the 1997 quarter.

The company said higher revenues from network access services -- mostly fees paid by competing telecommunications companies for access to the Hawaii system for long-distance connections -- were offset to some extent by decreases in other revenues.

Hawaiian Tel said its network access revenues of $49 million in the latest quarter were up 21 percent from $40.5 million in the year-earlier quarter. Minutes of use were up 5 percent.

The company had an increase of $1.4 million in special access revenues, due to increased bandwidth requirements of Internet service providers and other high-capacity users. Higher access charges for users of dedicated private lines contributed $7 million of the increased revenues.

However, network access revenues were hurt -- to the tune of $2.5 million -- because of interstate rate reductions resulting from a Federal Communications Commission order.

GTE Hawaiian Tel's traditional business, providing telephone service to Hawaii residences and businesses, still produced the biggest share of its revenues, $68.4 million in the latest quarter. That was up by a 6 percent from $64.7 million in the year-earlier period, a much smaller amount than the increase in access fees.

Part of the increase in local service revenues was a $1.5 million rise in sales of custom calling features such as GTE's SmartCall.

On the negative side, the company had a 20.3 percent decrease in revenues from toll services, $15.7 million in the latest quarter compared with $19.7 million in the year-earlier period. The company said the decline was primarily caused by competition with long-distance companies that are authorized to provide interisland toll service. Also contributing to the toll service decline was a lower rate structure that went into effect last May.

GTE Hawaiian Tel is a wholly owned subsidiary of GTE Corp. but files its own financial reports with the Securities & Exchange Commission.